Understanding The Settlement Process
Before setting expectations about the length of your property settlement process, it’s important to understand the ins and outs of the process itself. Property settlement can be defined as the legal process that transfers property ownership from one party to another. It’s the final stage of a property sale, and marks the beginning of the ‘settlement period’, wherein contracts are exchanged and the property is finally settled.
The property settlement process is typically conducted by the future owner’s legal and financial representatives, and begins the day the contract of sale is signed by both parties (the buyer and the vendor).
Arranging A Final Inspection
During the settlement period, it’s a good idea to verify that the property is in the same condition it was in when it was sold. Under WA legislation, the seller must give the buyer an opportunity to undertake a final property inspection within five business days prior to the settlement date. The best way to arrange this final inspection date is to contact the agent.
During the inspection, be sure to check all lights, plumbing, curtains, door handles, appliances, smoke alarms, garden areas and heating systems are in the same condition as when you first inspected the property. For these reasons, it can be helpful to bring the contract of sale with you so you can marry up any inclusions or exclusions that were referenced in this initial document.
Taking Out Insurance
During the lead-up to settlement day, it’s helpful to do as much preparation as possible. A key aspect of this is lining up your home and contents insurance policy. To ensure you are covered, make sure the insurance cover begins either on or just before your settlement day.
How Long Does Settlement Take?
As mentioned above, the settlement period begins the day the contract of sale is signed by both the buyer and the vendor. The length of the property settlement process will usually be indicated in this contract, and will be mutually agreed upon by both parties ahead of time.
This time period is negotiable, so the settlement period will be dependent on discussion between the two parties. In Western Australia, the settlement process typically takes between one and three months. This time allotment usually gives both the vendor and the buyer enough time to prepare the relevant paperwork, financing, moving, cleaning and other details that must be arranged before settlement day arrives.
What Happens On The Day Of Settlement?
There are a couple of tasks you’ll need to complete just prior to settlement day. Before the day arrives, you’ll receive a settlement adjustment statement which includes stamp duty, and the First Home Owner Grant (if applicable). This statement will also include items such as council rates, water rates and water usage. Typically, the vendor will cover these rates up until the day of settlement. From then on, these regular rates will become your financial responsibility as owner of the property.
On settlement day, you will assume legal ownership of your home. The process on the day will see both your settlement agent and your lender meet (along with yourself, or one of your representatives) to sign the final documents of sale.
Once the final documents have been signed and the adjustment statements have been reconciled, both parties will advise the agent, in writing, that settlement has occurred – which will authorise the agent to release the keys to the buyer. Then, your lender will register a mortgage against the title of your newly acquired property, and provide the necessary funds to purchase the new property. Your solicitor will check that this property and mortgage transfer is registered with the relevant titles officer.
Next, your lender will debit the amount they paid at settlement from your loan account, and you’ll need to pay the land transfer duty.
If you need a little more advice about your settlement day, it’s wise to contact your solicitor to gain further insight about necessary preparation.
What About Post-Settlement?
Once the settlement process is complete, you’ll be sent the full settlement details, along with a statement of adjustment that breaks down how the funds were distributed. Once you’ve received confirmation from your lender (including information about your loan amount and repayments), it’s time to pick up the keys!
Common Mistakes To Avoid
Communication and realistic expectations are essential in ensuring a smooth property settlement process – so be sure to maintain regular contact with all individuals involved for the best possible outcome for all parties. If you don’t, a few common mistakes could occur:
- Missing the settlement date
Unfortunately, if you miss the settlement date and are deemed ‘unable to settle’, you could be forced to pay interest on the amount owed for the property. This interest is negotiable and can even be waived if the vendor agrees – but it’s best to avoid this situation entirely by being punctual and prepared for the agreed settlement date.
- Finding suitable accommodation
Delays are likely to occur at the tail end of the property settlement process, so ensure you have suitable accommodation in case your settlement is delayed by a few hours, or days, after the nominated settlement date. The same goes for moving things such as furniture or appliances – it’s best to give yourself a few days after the settlement date in case things aren’t as fast-moving as you’d anticipated.
If you’re seeking advice on the property settlement process in Western Australia, look no further than C&R Settlements. With over 50 years of combined experience, we are a team of passionate and dedicated Perth settlement agents and conveyancers specialising in commercial and residential property. To date, we have settled over 80,000 properties – so once you’re ready to embark on the property settlement process, we’re here to help. Call us today on (08) 6424 9788 or email us at admin@crsetts.com.au for more information.